The capital markets are closing the year with a bang, after a slow start. The new administration in the White House combined with the age of this cycle contributed to a decrease in deal activity in the first half of the year. This summer, the market, however, accelerated, and activity in the second half of the year has helped rebound deal volume back to initial expectations. We sat down with Shlomi Ronen, managing principal at Dekel Capital, for an exclusive interview to review the capital markets activity this year and get his expectations for the close of 2017.
GlobeSt.com: After a slow start to the year, capital markets activity picked up at yearend. What drove the surge in the second half of the year?
Shlomi Ronen: I think the lack of activity in the first half of the year and the hesitation related to the post-election uncertainty drove activity in the second half of the year. There is still uncertainty regarding what will actually get done or what the administration will get done. They had a big agenda, and a lot of people took a wait-and-see attitude. Once it was clear that there is a tough slog ahead for the administration to get their very aggressive policies in place, people felt they could do some deals. The market settled and it was back to business as usual—but business as usual with not having done any deals in the beginning of the year.
GlobeSt.com: There are still several uncertainties, especially on this issue of tax reform. Are you seeing hesitation from borrowers about tax reform?
Ronen: I am not seeing it at this point. The one point of the friction that we are seeing among investors is just the longevity of the cycle and an eye towards the risk that they are taking and that they are willing to take.
GlobeSt.com: What types of capital markets deals have made up the end-of-year activity?
Ronen: Our client base is generally value-add and development focused, and so our view is skewed as a result. The bulk of what we have seen is value-add and development. On the office side, we are seeing mostly value-add, and on the multifamily side, it has been more development focused with some value-add.
GlobeSt.com: Has the increase in activity at the end of the year made up for the slow start? Were you able to hit your projected goals?
Ronen: We projected that this year would be relatively robust, given the strong economic fundamentals that were in place at the end of last year combined with the low interest rate environment. This year will turn out to be a very active year for us overall and an up year for us in terms of deal volume and closings. We did quite a bit of multifamily and office deals this year, and we saw the focus shift to for-sale residential. We worked on a handful of those deals, and I think that we are at the early stages of a trend for for-sale residential, given the pent up demand in that sector. The other sector that we have been very active in is industrial. It is red hot, and there isn't enough industrial development happening in core infill locations accommodate demand.
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Kelsi Maree Borland
